State water shortage: An economic fallout?

U-T EconoMeter panel weigh on impacts to San Diego

In this photo taken Tuesday, Feb. 4, 2014, diners at the Country Skillet restaurant, in Willits,Calif. are reminded of the water shortage facing the community. In the midst of an historic drought and area reservoirs holding less than a 100-day supply of water, Willits city leaders have banned lawn watering, car washing and have asked restaurants to serve water only upon request.(AP Photo/Rich Pedroncelli)
The Associated Press

In this photo taken Tuesday, Feb. 4, 2014, diners at the Country Skillet restaurant, in Willits,Calif. are reminded of the water shortage facing the community. In the midst of an historic drought and area reservoirs holding less than a 100-day supply of water, Willits city leaders have banned lawn watering, car washing and have asked restaurants to serve water only upon request.(AP Photo/Rich Pedroncelli)

Marney Cox, San Diego Association of Governments

Over the past decade or more the San Diego County Water Authority has been busy diversifying our region’s sources of water, increasing storage capacity and setting up conservation programs, all designed to protect the San Diego region and its economy from a water shortage like what is being experienced statewide. As a result, San Diego is better prepared today to respond to water supply challenges. However, I think CWA would agree more can and should be done and there’s no one solution to achieving lasting supply independence; rather, all the options available need to be explored, including conservation, desalination, recycling and reuse.

Yes
64% (14)

No
36% (8)

Phil Blair, Manpower

San Diego business have lived with the threat of water shortages, electric shortages and every other hindrance you can imagine. We are a hardy corps that plans on contingencies and perceptions. We appreciate warnings and planning ahead, but we do want to know when challenges are real and not overreact.

Kelly Cunningham, National University System

San Diego benefits from billions of dollars invested to store and move water around Southern California by the San Diego County Water Authority and Metropolitan Water District of Southern California. Whereas the Central Valley is in dire shape, Southern California should be able to weather the drought this year. But if California continues to experience drought beyond 2014, San Diego could see dramatic declines in agriculture and horticulture. Power generation at Glen Canyon and Hoover dams could also be significantly cut, impacting the supply and cost of power. Rising prices for both water and electricity will have lasting and significant economic impacts.

Gina Champion-Cain, American International Investments

Water is at the heart of the state's economic vitality: its wildlife habitat, shipping, transportation and recreation. Yet we as San Diegians need to manage our growth, by modifying how we live and how we waste. Cities, farms and environment are clashing over the water shortage as they all have different needs. For instance, farms will say their labor will be drastically cut which will affect other jobs and the pricing of our food if they are forced to drastically reduce their water usage. However, San Diego needs to be at the forefront of water conservation; it must be resourceful and creative about its use of water. If San Diego gets ahead of the curve on modifying its wasteful behavior, then we can continue to have a healthy economy with less water. It's just a matter of being smarter about how we use it.

Alan Gin, University of San Diego

For the immediate future, San Diego is in relatively good shape in terms of our water supply due to our reliance on the Colorado River. There’s not as much trouble with that source this year compared to the rest of California. It is the long-term that is a concern. More demands are being put on the Colorado River and the competition for its use may negatively impact San Diego’s economy in the future. It will become increasingly expensive to supply water for the region’s growing population. Also, in the past, industries such as biotechnology have raised questions about the availability of water, and that might affect their growth.

Stephan Goss, Zeeto Media

Unless there is a group planning to open up a new water park in the near future, I think it should not have a major impact in the county. San Diego gets most of its water from the Colorado River and does not rely as heavily on the snowpack in the northern part of the state as many central California counties do. According to the San Diego County Water Authority, we have large storage reserves that should allow us to not experience any negative effects for 2014 and beyond.

James Hamilton, University of California San Diego

Climatologists expect California’s future to be drier than its past. 2013 was the driest year on record in many parts of the state and 2014 could turn out to be much worse. San Diegans should expect to pay more for water and get less. The governor has said the state needs to borrow an additional $25 billion for water construction projects as well as spend $687 million to provide immediate assistance. Drought also raises the danger of damaging fires. Agriculture including nursery products is important to the San Diego economy. Development and tourism could also be affected if the problem worsens.

Jamie Moraga, intelliSolutions

Water is essential to our everyday life. We may not have much farming in the city of San Diego but we do have farming (crops and livestock) in the county and in the state. California is the top U.S. agricultural producer at $44.7 billion. With a shortage of water, that affects milk, beef, fruits and vegetable crops, wine, and yes, craft beer. Without water, there is no beer. We also may not realize that the biotech industry (one of the three largest economic drivers in San Diego) utilizes significant amounts of water. All of this will be passed onto consumers – higher costs on your water bill and higher prices for food and beverages. Now bring in San Diego’s infamous fire season. The deadly combination of drought and fire together can equal major consequences for San Diego’s economy in the immediate future. So, what can we do? Conserve, recycle water, increase storage in groundwater aquifers, build desalinization plants, remove dry brush around your homes, and pray for rain.

Gary London, The London Group Realty Advisors

But they may be good consequences! We ought to look at the water shortage as an economic problem, not a resource problem. The cost of delivering the water here is rapidly approaching the cost of ocean water conversion. Because our local water agencies have been long running, successful implementation of a water policy aimed at diversification, we probably have sufficient resources to get us through this drought. The specter of the drought might even encourage more aggressive public policy to convert, recycle and conserve. Most business sectors should be well able to sustain and prosper. I think we are in pretty good shape in the long run.

Jim Plante, Pathway Genomics

A stable and healthy water supply is a fundamental necessity to our local economy. With the ability to only store approximately 10% of our local water needs, we are reliant on the imported water from the North and East. When the supply of that water is reduced by drought or by the increasing demands by upstream local, agricultural, and environmental constituencies, our economic health is at risk. The development of more local production and storage is helpful, but also comes at a steep cost.

Norm Miller, University of San Diego

There is excess demand for water because it is too cheap. We need steeper premium increases as households go beyond basic needs for tropical gardens and swimming pools so that it becomes feasible to desalinate ocean water. We also need to reduce subsidies to agriculture. It is astounding that we grow so much rice in California with fields flooded to 5 inches of water. While among the most efficient and productive rice farmers in the world, they could not compete globally without cheap water. At market-driven water prices, the farmers would switch to less water-intensive higher value crops.

Rick Sanborn, Seacoast Commerce Bank

The San Diego Water Authority has plans in place to effectively manage a water shortage through its approved water shortage and drought response plan. In addition, the authority has diversified its portfolio of supply so that San Diego is not 100 percent dependent on one source. San Diego gets 20 percent of its water supply from the California water system, with the majority, some 60 percent, from the Colorado River, and the remainder from other sources and our reserves. Given the authority’s plan, and the diverse supply chain, I don’t believe the current water shortage will have a major impact on our economy.

Lynn Reaser, Point Loma Nazarene University

After facing up to 50 percent water reductions during the 1991 drought, San Diego has taken important corrective actions. Water purchase agreements with the Imperial Irrigation District and important investments have reduced San Diego’s dependence on the Metropolitan Water District from 95 percent to less than one-half. Spending on various projects, ranging from lining of the Coachella and All-American Canals to raising the San Vicente Dam’s storage capacity, are paying dividends. Consumers are conserving, with per capita water consumption down over 25 percent from 1991. Water remains a serious long-term issue in San Diego, but we will be spared from the current crisis.

John Sarkisian, Pro Performance Sports

However there will be long term economic consequences if San Diego County does not develop plans to provide water to a growing metropolitan area. There is abundant water off our coast in an area called the Pacific Ocean. The new desalination plant coming on line in Carlsbad will be the first of many facilities that should be built to access the oceans water. I would assume the economics are now aligning such that the cost to produce clean water from the ocean is competitive with the high costs of accessing water from outside the region. Certainly the technology is available.

Dan Seiver, Reilly Financial Advisors

But there will be long term consequences if California's drought continues. At some point, San Diego will reintroduce water rationing, and water rates will have to rise if water becomes scarcer. This will negatively impact all water users in San Diego, and will reduce economic activity and incomes. California's water problems will also affect San Diego as the price of fruits and vegetables rises as water in the Central Valley becomes scarcer and more expensive. Continuing drought in California will impact the state budget negatively, and will make San Diego less attractive as a place to live and work.

Chris Van Gorder, Scripps Health

Drought conditions will have economic impacts statewide, but San Diego County is faring better than many areas because of its diversified water supplies. The region’s water agencies – led by the San Diego County Water Authority – have secured highly reliable Colorado River water transfers, increased local water supplies and invested more than $2 billion in major water projects over the past decade to improve water supply reliability. Those efforts are protecting our $188 billion economy; no mandatory cuts to our water supplies are expected this year. However, we all still need to conserve water in case it remains dry into 2015.